Greek PM pledges first glimmer of recovery in 2013

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Last Updated: Tue, Dec 04, 2012 22:15 hrs

Greece's prime minister on Tuesday promised an austerity-weary nation that 2013 will bring the first signs of economic recovery after a punishing five-year recession, and held out hope that pending tax reforms will reduce the burden on lower earners.

Antonis Samaras said last week's new debt relief deal with international creditors — on whose loans the country has depended for more than two years — has "finally" killed fears that Greece could be forced to abandon the club of European nations that share the euro currency.

To secure two bailouts and the new debt concessions from its European partners and the International Monetary Fund, Greece imposed drastic spending cuts and tax increases that slashed incomes and contributed to an economic output slump of more than 20 percent. Health, education and welfare funds were slashed, and unemployment has reached 25 percent.

"2013 is a turning point," Samaras told a business conference in Athens. "For the first time we will see signs of recovery."

The government has said it expects a return to growth in 2014.

Samaras said last week's deal with creditors in Brussels, which hinges on a €10 billion ($13 billion) debt buyback drive this week, affords Greece "a single chance ... which we must not squander — because it will be the last."

Samaras denied press reports his three-party coalition is planning to slap a 45 percent income tax rate on people earning more than €25,000 ($32,000) a year, saying a draft of new tax legislation would lower the burden on that income bracket and pledging a gradual reduction in rates as deficit-cutting measures take effect.

Finance Ministry figures released Tuesday said Greece has achieved a primary surplus — which excludes spending on debt servicing — of €2.3 billion ($3 billion) in the first 10 months of 2012, compared to a €4.2 billion ($5.5 billion) shortfall a year ago.

Speaking earlier at the same conference, the leader of the left-wing anti-bailout party that is leading opinion polls called for a delay in the repayment of the country's rescue loans until the recession is over.

Alexis Tsipras, who heads the main opposition Radical Left Coalition Party, argued that the austerity policies pursued by Samaras' government would continue to weaken Greece's economy and leave the country ever-more reliant on emergency loans.

"What we ask for is time," Tsipras said. "We ask for a suspension — a moratorium — of servicing the debt until the country returns to a course of growth, so that we can mobilize resources, restart the economy, and bring growth."

Tsipras said the new terms set out by the IMF and its 16 euro partners fell short of a viable solution.

"Unfortunately, they have postponed reaching a lasting settlement for the country's debt and crisis," he said. "This will only extend the uncertainty."

The 38-year-old Tsipras saw a five-fold increase in popular support for his party between general elections in 2009 and June 2012 as he campaigned by attacking Greece's political establishment and economic austerity.

The conservative-led government says his policies are populist and unrealistic and would see Greece default on its debt and leave the eurozone.

Tsipras, who has led opinion polls for about three months, insisted that his party — an often-squabbling alliance of a dozen small left-wing groups — is ready to govern.

"Our program is based on the intention to renegotiate the (bailout) agreement with our partners — not to repeat the causes of the crisis but to deal with them," he said.